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BHP surge drives ASX to close higher

Australian shares rose on Wednesday after global miner BHP reported record iron ore output for 2017/18, which sent its shares up over three per cent in a boost to peers and overall sentiment.

The benchmark S&P/ASX200 index closed up 41.5 points, or 0.67 per cent, at 6,245.1 points, while the broader All Ordinaries gained 40.7 points, or 0.65 per cent, to 6,329.1 points.

Wall Street's positive overnight lead also helped gains.

BHP, the world's biggest miner, said its iron ore output rose three per cent during the three months through June, topping forecasts, and set its fiscal 2019 production target slightly higher.

BHP's shares rose 3.3 per cent to a near nine-month high on the news, and pulled up the mining index 1.4 per cent.

Even an expected $650 million charge to 2017/18 results to cover the failure of the Samarco Dam in Brazil did not dampen investor sentiment.

"Everyone knew there was a charge coming; that was probably towards the lower end of the worst-case scenario. I think the hit they have taken is at the lesser end of the scale," said Christopher Conway, head of research and trading at Australian Stock Report.

Positive BHP sentiment cascaded to its peers, with Rio Tinto and South32 Ltd up 0.4 per cent and 0.9 per cent, respectively.

On the other hand, energy stocks extended their declines as oil prices dropped after an industry group reported that US crude inventories rose last week, defying analyst expectations for a significant reduction.

The energy index, fell for a sixth straight session, closing 0.6 per cent lower on Wednesday.

In companies news, education provider Navitas slipped 3.3 per cent to $4.09 after flagging the closure or sale of its Australian health care and community services training business and the closure of some US colleges in a restructure that will cost it $130 million.

New Zealand-based, China-focused dairy producer Keytone Dairy gained 16 cents, or 80 per cent, on its 20 cent issue price in its debut on the ASX to close its first day of trading at 36 cents.

The gold index also fell for a fourth consecutive session, as gold prices hovered near one-year lows, after upbeat testimony to Congress from Federal Reserve Chairman Jerome Powell on the US economy buoyed the US dollar.

The Australian dollar slipped to 73.5 US cents, from 74.31 US cents on Tuesday, as the prospect of more rate hikes in the US drew investors to the greenback.

ON THE ASX

* The benchmark S&P/ASX 200 index closed up 41.5 points, or 0.7 per cent, at 6,245.1 points

* The broader All Ordinaries index was up 40.7 points, or 0.7 per cent, at 6,329.1 points

* The SPI200 futures contract was up 36 points, or 0.6 per cent, at 6,194 points at 1630 AEST

CURRENCY SNAPSHOT AT 1700 AEST:

One Australian dollar buys:

* 73.50 US cents, from 74.31 US cents on Tuesday

* 83.11 Japanese yen, from 83.498

* 63.20 euro cents, from 63.32

* 56.15 British pence, from 56.05

* 108.88 NZ cents, from 108.86

GOLD:

The spot price of gold in Sydney at 1700 AEST was $US1,224.19 per fine ounce, from $US1,242.87 per fine ounce on Tuesday.

Austrlaian Associated PressBack to Breaking News

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